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Barnes & Noble Education(BNED) - 2022 Q1 - Earnings Call Transcript
BNEDBarnes & Noble Education(BNED)2021-09-02 17:23
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Financial Data and Key Metrics Changes - Total sales for Q1 2022 were 240.8million,anincreaseof240.8 million, an increase of 36.8 million or 18% compared to 204millioninQ12021[42]−Theconsolidatedgrossmarginrateimprovedto24.9204 million in Q1 2021 [42] - The consolidated gross margin rate improved to 24.9% from 15.1% in the prior year, driven by a favorable sales mix and lower inventory reserves [47] - Selling and administrative expenses increased by 16.2 million or 23.1% due to the reopening of stores and bringing back employees [48] Business Line Data and Key Metrics Changes - Retail segment sales increased by 51.7million,withcomparablestoresalesrisingby49.851.7 million, with comparable store sales rising by 49.8%, including a 21.9% increase in textbook sales and a 118.4% increase in general merchandise [42][43] - DSS sales grew by 2.4 million or 41.4% to 8.3million,attributedtoincreasedsubscribersforbartlebyandStudentBrands[30][47]MarketDataandKeyMetricsChanges−TheFirstDayCompletemodelisnowofferedatinstitutionswithundergraduateenrollmentofover300,000students,upfrom43,000studentslastfall,indicatingayear−over−yeargrowthmultipleofapproximatelyseventimes[22]−ThepartnershipwithFanaticsandLidsisexpectedtoenhanceproductassortmentandimproveomnichannelexperiences,potentiallyincreasingsalestoalumniandfans[24][28]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusingonenhancingcoursematerialdeliverysolutionsthroughinclusiveaccessmodelstoimprovestudentoutcomes[12][22]−StrategicpartnershipswithFanaticsandLidsaimtogrowsalesandimprovethevaluepropositionforcampuspartners[25][28]−ContinuedinvestmentindigitalofferingslikebartlebyandtheintroductionofnewfeaturessuchasMathSolverarepartofthestrategytomeetevolvingstudentneeds[33][35]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismabouttheupcomingfallsemester,anticipatingareboundinin−personclassesandcampusactivities[7][8]−ThecompanyiscloselymonitoringtheimpactofCOVID−19variantsbutremainsconfidentinitsabilitytoadaptandservecampuspartners[39][81]−Thereisastrongdemandforgeneralmerchandise,andmanagementisfocusedonensuringadequateinventorytomeetthisdemand[81][86]OtherImportantInformation−Thecompanyoperates1,429college,university,andK−12schoolbookstores,including784physicalbookstoresand645virtualbookstores[49]−Thecashbalanceattheendofthequarterwas8.3 million, attributed to increased subscribers for bartleby and Student Brands [30][47] Market Data and Key Metrics Changes - The First Day Complete model is now offered at institutions with undergraduate enrollment of over 300,000 students, up from 43,000 students last fall, indicating a year-over-year growth multiple of approximately seven times [22] - The partnership with Fanatics and Lids is expected to enhance product assortment and improve omnichannel experiences, potentially increasing sales to alumni and fans [24][28] Company Strategy and Development Direction - The company is focusing on enhancing course material delivery solutions through inclusive access models to improve student outcomes [12][22] - Strategic partnerships with Fanatics and Lids aim to grow sales and improve the value proposition for campus partners [25][28] - Continued investment in digital offerings like bartleby and the introduction of new features such as Math Solver are part of the strategy to meet evolving student needs [33][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming fall semester, anticipating a rebound in in-person classes and campus activities [7][8] - The company is closely monitoring the impact of COVID-19 variants but remains confident in its ability to adapt and serve campus partners [39][81] - There is a strong demand for general merchandise, and management is focused on ensuring adequate inventory to meet this demand [81][86] Other Important Information - The company operates 1,429 college, university, and K-12 school bookstores, including 784 physical bookstores and 645 virtual bookstores [49] - The cash balance at the end of the quarter was 7.6 million, with outstanding borrowings of $203.7 million, showing an improvement from the previous year [49] Q&A Session Summary Question: What are the take rates for First Day Complete from students returning to campus? - Management noted strong student adoption and fulfillment across 65 campus stores supporting First Day Complete, with many institutions including fees in tuition, leading to high adoption rates [54][56] Question: How is the Fanatics and Lids partnership impacting in-store merchandising? - The partnership has improved the quality and breadth of product assortments in stores, leading to a more appealing retail experience [72][74] Question: What is the outlook for profitability as campus partners return to normal operations? - Management indicated a widespread return to in-person learning, with a focus on meeting demand for general merchandise and ensuring supply chain stability [78][81]